Avery Dennison to Produce Inlays Based on PragmatIC’s NFC Connect—with Broader Smart Packaging Implications

In February 2026, Pragmatic announced that Avery Dennison would mass produce inlays using its NFC Connect PR1301 flexible Integrated Chip (IC). The PR1301 IC launch in March 2025 came with early affirmations of interest from key label and packaging suppliers, including Avery Dennison, Amcor, Tageos, and HID Global, the first two of which are investors in Pragmatic. In the intervening year between the launch and this announcement, the focus has primarily been on market development through shipping product samples.

Pragmatic is a semiconductor innovator based in Cambridge, United Kingdom. The company designs ICs differentiated by their low footprint and flexible form factor, more highly integrated component packaging, and focus on “just enough” intelligence and memory. Pragmatic, unusually, also manufactures its own chips from fab facilities in Durham, with a manufacturing process differentiated by a reduced number of steps (around 30 steps, compared to 200+ for normal silicon manufacturing), lower energy usage through lower-temperature processes, and a thin-film transistor approach using layered printed conductive materials instead of silicon—a process much cheaper per square millimeter compared to silicon manufacturing.

These differentiators across IC design and manufacturing result, ultimately, in a significantly lower price point compared to standard silicon. The majority of Pragmatic’s manufacturing today is focused on producing Near Field Communication (NFC) chips, but the process is applicable to a much broader range of technologies. The company has raised significant funds, including a Series D US$231 million in 2023/2024 with the goal of expanding manufacturing capacity.

The PR1301 IC is focused on mass market applications, particularly retail and healthcare. Retail markets are especially unique in their demand for very low-cost tolerance, requiring a highly pared down chip to justify item-level identification. One of PR1301’s differentiators is a focus on “just enough” intelligence, offering 96 bytes of memory compared to hundreds of bytes or low kilobytes in many other NFC chips, and a data transfer rate of 26.48 Kilobits per Second (Kbps) compared to 106 Kbps or above. The argument is that most NFC chips are over-engineered for simple consumer applications, which require very basic information about a product or simply contain a URL link where consumers can access additional information, such as for Digital Product Passports (DPPs).

While high memory, logic, read/write cycles, range, data transfer rates, access protection and encryption, and other features are important for many applications, they make it challenging for Fast Moving Consumer Goods (FMCG) manufacturers to justify the investment, given the price sensitivity of their products. Paring down NFC IC capabilities is a key focus for suppliers to be able to target this market. With PR1301, Pragmatic is moving closer to its unit price target of US$0.01 to US$0.03, compared to US$0.05 to US$0.08 for traditional silicon-based chips. Pragmatic’s goal is not to compete as a replacement technology for existing NFC solutions, but to open up new high-volume use cases not possible with existing silicon platforms.

Today, Pragmatic’s focus and success is primarily with NFC, and PR1301 will look to expand this market from a heavy dominance by smart payment or transport cards to the much larger opportunity for connected packaging. Importantly, the Pragmatic design and manufacturing process can be applied to other technologies, including UHF and Bluetooth®, though these are part of a longer-term roadmap. This would enable a fabrication process with a more integrated compute, memory, and Radio Frequency (RF) front end, yielding a much lower-cost product. There is a significant focus today in reducing the footprint of chips to facilitate bonding in label printing processes, as demonstrated by the enthusiasm around InPlay’s IN120 Bluetooth® chip launch; as well as reducing chip costs to bring intelligence to a wide variety of objects that require higher performance than NFC, but lower performance than longer-range technologies. As flexible printed electronics begin to scale, Pragmatic’s technology begins to come into its own.

Beyond selling ICs, Pragmatic also offers services such as FlexIC Foundry and Fab-as-a-Service (FaaS). FlexIC Foundry allows third parties to design their own chips using Pragmatic’s process, while Fab-as-a-Service enables localized chip fabrication within customers’ sites. The latter has the opportunity to significantly reduce the cost of producing connected labels by integrating the chip manufacturing process with the label manufacturing process itself, and allowing flexibility in chip manufacturing runs, enabling inlay designers to stock less inventory and to customize features for different products. Decentralizing the chip manufacturing process has significant implications on shortening the chip supply chain and giving more bargaining power to both label vendors and end customers.

Today, Pragmatic remains a Capital Expenditure (CAPEX)-heavy company, with over US$32 million invested in Research and Development (R&D) in 2024 and a total loss of around US$58 million, for revenue of US$2.3 million. This partnership with Avery Dennison is a critical step in ramping up its production and revenue, giving it more headroom for further innovation in new target markets and with new technologies. The timing is good, with the arrival and expansion of European DPP regulations driving the need for consumer-facing data carriers, and a growing interest in authentication solutions for Over-the-Counter (OTC) and other medications.

The argument must still be made in these cases for an NFC solution over, for instance, a QR code. Integrating components even more to include value-added features, such as sensing capabilities, or offering multi-protocol solutions within a single package could help Pragmatic differentiate its technology compared to traditional silicon approaches. Pragmatic’s approach does not offer a direct replacement to silicon manufacturing, but rather helps open up low-cost new application areas: understanding what these applications are, what the technology requirements are beyond NFC, and what the trigger points and balance of features to cost will be for adopters to invest, will be crucial to growth.